Texas and Pacific Ry. Co. v. ICC
162 U.S. 197 (1896)

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U.S. Supreme Court

Texas and Pacific Ry. Co. v. ICC, 162 U.S. 197 (1896)

Texas and Pacific Railway Company v.

Syllabus

The Interstate Commerce Commission is a body corporate, with legal capacity to be a party plaintiff or defendant in the federal courts.

The Circuit Court for the Southern District of New York had jurisdiction of the acts complained of in this suit.

The Southern Pacific Company, although a proper, was not a necessary, party to this suit.

In enacting the Interstate Commerce Acts, Congress had in view and intended to make provision for commerce between states and territories, commerce going to and coming from foreign countries, and the whole

Page 162 U. S. 198

field of commerce except that wholly within a state, and it conferred upon the Commission the power of determining whether, in given cases, the services rendered were like and contemporaneous, whether the respective traffic was of a like kind, and whether the transportation was under substantially similar circumstances and conditions.

If the Commission has power, of its own motion, to promulgate general decrees or orders, which thereby become rules of action to common carriers, such exertion of power must be confined to the obvious purposes and directions of the statute, since Congress has not granted it legislative powers.

The action of the defendant company in procuring from abroad, by steamship connections, through traffic for San Francisco which, except for the modified through rates, would not have reached the port of New Orleans, and in taking its pro rata share of such rates, was not of itself an act of "unjust discrimination" within the meaning of the Interstate Commerce Act.

In construing the terms of a statute, especially when the legislation is experimental, courts must take notice of the history of the legislation and, out of different possible constructions, must select the one that best comports with the genius of our institutions.

In enacting the statutes establishing the Interstate Commerce Commission, the purpose of Congress was to facilitate and promote commerce, and not to reinforce the provisions of the tariff laws, and the effort of the Commission to deprive inland consumers of the advantage of through rates seems to create the mischief which it was one of the objects of the act to remedy.

The conclusions of the Court, drawn from the history and language of the acts under consideration, and from the decisions of the American and the English courts, are:

(1) That the purpose of the act is to promote and facilitate commerce by the adoption of regulations to make charges for transportation just and reasonable, and to forbid undue and unreasonable preferences or discriminations.

(2) That, in passing upon questions arising under the act, the tribunal appointed to enforce its provisions, whether the Commission or the courts, is empowered to fully consider all the circumstances and conditions that reasonably apply to the situation, and that, in the exercise of its jurisdiction, the tribunal may and should consider the legitimate interests as well of the carrying companies as of the traders and shippers, and in considering whether any particular locality is subjected to an undue preference or disadvantage the welfare of the communities occupying the localities where the goods are delivered is to be considered as well as that of the communities which are In the locality of the place of shipment.

(3) That among the circumstances and conditions to be considered as well in the case of traffic originating in foreign ports as in the case of traffic originating within the limits of the United States,

Page 162 U. S. 199

competition that affects rates should be considered, and in deciding whether rates and charges made at a low rate to secure foreign freights which would otherwise go by other competitive routes are or are not undue and unjust, the fair interests of the carrier companies and the welfare of the community which is to receive and consume the commodities are to be considered.

(4) That If the Commission, instead of confining its action to redressing on complaint made by some particular person, firm, corporation, or locality, some specific disregard by common carriers of provisions of the act, proposes to promulgate general orders, which thereby become rules of action to the carrying companies, the spirit and letter of the act require that such orders should have in view the purpose of promoting and facilitating commerce and the welfare of all to be affected, as well the carriers as the traders and consumers of the country.

The mere fact that in this case the disparity between through and local rates was considerable did not warrant the circuit court of appeals in finding that such disparity constitutes an undue discrimination, especially as that disparity was not complained of by anyone affected thereby.

This is an appeal from a decree of the United States Circuit Court of Appeals for the Second Circuit affirming a decree of the Circuit Court of the United States for the Southern District of New York, filed October 5, 1892.

The original bill of complaint was brought by the Interstate Commerce Commission, created by virtue of an Act of Congress, entitled "An Act to Regulate Commerce," approved February 4, 1887, as amended by an Act approved February 10, 1891, against the Texas and Pacific Railway Company, a corporation chartered and existing under and by virtue of the laws of the United States, having its principal office at New York City.

The object of the bill was to compel the defendant company to obey an order of the Interstate Commerce Commission, made on January 29, 1891, whereby the said defendant was ordered to

"forthwith cease and desist from carrying any article of imported traffic shipped from any foreign port through any port of entry of the United States, or any port of entry in a foreign country adjacent to the United States, upon through bills of lading destined to any place within the United States at any other than upon the inland tariff covering other freight from such port of entry to such place of destination,

Page 162 U. S. 200

or at any other than the same rates established in such inland tariff for the carriage of other like kind of freight, in the elements of bulk, weight, value, and expense of carriage,"

and which order the said defendant was alleged to have wholly disregarded and set at naught.

It appears by the bill that on March 23, 1889, the Commission, of its own motion and without a hearing of the parties to be affected, had made a certain order wherein, among other things, it was provided as follows:

"Imported traffic transported to any place in the United States from a port of entry or place of reception, whether in this country or in an adjacent foreign country, is required to be taken on the inland tariff governing other freights."

2 I.C.C. 658.

Subsequently complaint was made to the Interstate Commerce Commission, in a petition filed by the New York Board of Trade and Transportation, that certain railroad companies were disregarding said order, and, in violation of the Act to Regulate Commerce, were guilty of unjust discrimination in that they were in the habit of charging the regular tariff rates upon property when delivered to them at New York and Philadelphia for transportation to Chicago and other Western points, while charging other persons rates which were lower and even fifty percent thereof for a like and contemporaneous service under substantially similar circumstances and conditions when the property was delivered to them at New York or Philadelphia by vessel or steamship lines under through bills of lading from foreign ports and foreign interior points issued under an arrangement between the said railroad companies and such vessels and steamship lines and foreign railroads for the continuous carriage at joint rates from the point or port of shipment to Chicago and other Western points, the railroad companies' share of each through rate being lower than their regular tariff rates.

The Commercial Exchange of Philadelphia and the San Francisco Chamber of Commerce intervened and became parties complainant also.

The companies first warned and called upon to answer the

Page 162 U. S. 201

complainant were the Pennsylvania Railroad Company, the Pittsburgh, Fort Wayne and Chicago Railway Company, and the Pittsburgh, Cincinnati and St. Louis Railway Company; but after the coming in of the answers of said companies, it was deemed necessary to make quite a number of other railroad companies parties defendant -- among them the Texas and Pacific Railway Company, the defendant in the present case, and the Southern Pacific Company. The several defendant companies filed answers. The answer of the Texas and Pacific Railway Company, admitting that, both before and since March 23, 1889, it had carried imported traffic at lower rates than it contemporaneously charged for like traffic originating in the United States, justified by claiming that through shipments from a foreign country to the interior of the United States differ in circumstances and conditions from shipments originating at the American seaboard bound for the same interior points, and that defendant company has a legal right to accept for its share of the through rate a lower sum than it receives for domestic shipment to the same destination from the point at which the imported traffic enters this country.

The result of the hearing before the Interstate Commerce Commission was, so far as the present case is concerned, that the Commission held that the Texas and Pacific Railway Company was not justified in accepting as its share of a through rate on imported traffic a less charge or sum than it charged and received for inland traffic between the port of reception and the point of delivery, and the said order of January 29, 1891, commanding that said company desist from distinguishing in its charges between foreign and inland traffic, was made. 4 I.C.C. 447.

As the Texas and Pacific Railway Company declined to observe said order, the Commission filed its present bill against said company in the Circuit Court of the United States for the Southern District of New York.

The railway company filed a plea in abatement denying that its principal office was in the Southern District of New York and denying that it had violated or disobeyed the order of the Commission within the State of New York or

Page 162 U. S. 202

at any place within the jurisdiction of the circuit court. Certain affidavits were filed upon a stipulation as to the facts, and, after hearing, the plea was overruled and also a motion to dismiss the proceedings for want of jurisdiction was denied, and to these rulings exceptions were taken and allowed.

The defendant company answered, alleging that the Interstate Commerce Commission was not a corporation, person, or body politic capable of bringing or maintaining this suit; that the petition or bill failed to allege or show any facts constituting a violation by the defendant of the order of January 29, 1891, and did not show or allege any specific act or acts by the defendant in violation of the act of Congress; that the Southern Pacific Company, as participant with the defendant in the making and division of the through rates, was a necessary party, and that the bill should be dismissed for want of such necessary party.

The answer, admitting that the company had charged and received, since January 29, 1891, rates for the transportation of commodities from Liverpool and London, England, via New Orleans and the Texas and Pacific Railway and the Southern Pacific Company, to San Francisco, California, different from the rates charged and received for the transportation of inland commodities from New Orleans by the same route to San Francisco, asserted that it had a legal right so to do, and that such action was not in violation of the act of Congress regulating commerce, or of any valid order of the Interstate Commerce Commission. The answer sets up a number of facts which it alleged sustained its defense.

The cause was heard upon the petition, answer, and sundry exhibits, and resulted in a decree declaring that the order of January 29, 1891, was lawful and that the same had been disobeyed by the defendant, and enjoining the defendant from further continuing such disobedience of said order. An appeal, with errors assigned, was taken from this decree to the Circuit Court of Appeals of the Second Circuit by which, on June 3, 1893, the decree of the circuit court was affirmed with costs. 57 F. 948. An appeal was then taken, on errors assigned, from said decree to this Court.

Page 162 U. S. 203

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